Automotive

Lang’s assessment is that at the beginning of 2023, the average age of vehicles on the road in the United States was 12.8 years, which is a record. Due to COVID-19, about 9 million fewer cars and light trucks aged five years and under were on U.S. roads than in 2018. This reversed the trend of an expanding new car and light truck population beginning in 2014, as the recovery from the Great Recession of 2008 gained steam. He pointed out that new vehicles are critical to the aftermarket in several significant ways, ranging from the average age of vehicles to the annual miles accumulated by different vehicle age groups.

New car and light truck volume hit the 16-million mark during 2007 (one of the highest levels ever) but was cut back abruptly in 2008 by the Great Recession. Annual volume fell by nearly 6 million between 2007 and 2009—representing more than a one-third plunge—before slowly recovering to 15.6 million in 2013. From that point, the new car and light truck population enjoyed a “Golden Age” from 2014 through 2019, averaging 17.2 million in annual sales. The new vehicle market fell to 14.4 million in 2020, dipping down from about 17 million the previous year. Vehicle sales continued to decline during the next two years, bottoming out at 13.9 million in 2022. 

Several factors, some of them linked to the COVID-19 pandemic, have reduced the new vehicle market. Lang has projected that new vehicle sales in 2023 will total approximately 15 million, which is nearly 15% below the annual 17.2-million average from 2015 to 2019. In addition, he predicts that the new sales vehicle market will not return to pre-2020 levels before 2027 or later. 

Newer vehicles impact the aftermarket in at least four significant ways. First, the number of newer vehicles helps to determine the average age of all the vehicles in operation.

Second, the number of newer vehicles on the roads determines the population of the critical repair-age sweet spot (vehicles that are aged six to 10 years), which brackets cars and light trucks with the highest rates of annual usage across many aftermarket products. 

Third, vehicles five years and newer have traditionally been the primary source of dealer service bay business.

 Fourth, fewer new vehicles (which average the highest annual mileage) means that older vehicles are driven more yearly miles. The influence on the aftermarket of fewer younger vehicles will be critical in its development to 2030 and beyond. 

Vehicle Average Age

Two factors determine the age of vehicles on U.S. roads: new car and light truck sales and the annual scrappage of vehicles in operation. As the annual scrappage rates have trended down due to more durable vehicles and people keeping cars and light trucks longer, the new vehicle market has become ever more significant in determining the age of the vehicles in operation.

With the decline of car and light truck sales that began in 2020, the VIO’s average age has increased steadily. Lang expects the VIO average age will continue to climb for several years.

Size of the Repair-Age Sweet Spot

The repair-age sweet spot—once again, consisting of vehicles six to 10 years old—represents cars and light trucks with the highest rates of aftermarket use across many products. Lower new vehicle sales will reduce the population of the repair-age sweet spot in the coming years. By 2030, about 10 million fewer cars and light trucks will be six to 10 years old compared to 2025. Some may think this will cause a decline in aftermarket product volume.

Dealer Market Bays to Older Vehicles 

Vehicle dealers have traditionally marketed their service bays to vehicles five years and under. The sharp reduction of this age group since 2020 has caused many dealers to refocus their service bay activities across an older mix of vehicles. Light vehicle repair market competition will climb as dealers increasingly market their bays to older vehicle age groups, which traditionally have gravitated to independent (non-dealer) repair shops.

Mileage Shift to Older Vehicles

Newer cars and light trucks average more annual miles than older vehicles. When the size of the new car and light truck market declines, consumers use older vehicles rather than replacing them with newer ones. This causes a shift in heavy annual mileage to older vehicles. Since older vehicles use more aftermarket products per mile than newer ones do, this mileage shift leads to more wear and tear on the aftermarket parts of older vehicles. Essentially, the shift increases aftermarket product use. 

Future Developments

The impact on the aftermarket of the shrinking number of vehicles five years and newer will significantly impact the annual volume of aftermarket products, where products are purchased and installed as well as how they are distributed.

Here are some summary statements from Lang’s report that highlight the major points of contention: 

• Fewer new cars and light trucks on U.S. roads impact the average age of the total vehicle population. With the decline of new car and light truck annual sales since 2020 (compared to the period from 2014-2019), the average age of all light vehicles in the U.S. has grown rapidly. 
• Lower new vehicle sales mean that in coming years the population of the repair-age sweet spot will decline. Some think that this could be problematic for aftermarket volume.
• Vehicle dealers have traditionally marketed their service bays to vehicles five years and newer. With the falling young vehicle population, dealers are marketing their service bays to an older mix of vehicles, intensifying the competition of dealer bays with independent repair outlets. 
• Vehicles five years and newer average much higher annual mileage than older cars and light trucks. As the population of newer vehicles falls, heavy annual driving shifts to older vehicles, which use more aftermarket products per mile than more recent models.

This means that there will be more competition among fewer contestants. For those supplying components (engine oil, other lubricants and filters), your pencil must be sharp and your costs as low as possible. For those doing the maintenance on cars and light trucks—such as quick lubes, garages and specialty shops—you will have to streamline your operations and improve your brand. It will not be a market for the faint-hearted, and there will be some who won’t survive. 

Let the games begin!     

Steve Swedberg is an industry consultant with over 40 years experience in lubricants, most notably with Pennzoil and Chevron Oronite. He is a longtime member of the American Chemical Society, ASTM International and SAE International, where he was chairman of Technical Committee 1 on automotive engine oils. He can be reached at steveswedberg@cox.net.